House Prices Forecast to Double by 2025

House Prices Forecast to Double by 2025.

In a joint press release issued by the National Association of Estate Agents (NAEA) and the Association of Residential Letting Agents (ARLA), the two associations have forecast huge increases in both residential house prices and rental costs by 2025.

Their Housing Report suggests that the average house price in the UK is currently £280,000 and this will increase by around 50% by 2025 with an average UK house value of £419,000.

In London, the prediction is even higher where the average house price for London and Greater London could nearly double by 2025. The average house price in London is currently £515,000 and this could rise to £931,000 by 2025.

As far as the average rent is concerned, they forecast that the average rent for the UK will rise by around 25% by 2025 with the average in the UK rising from £134 per week to £171 per week. For tenants in London the picture is bleaker where average rents are expected to increase to £314 per week from £234 per week currently.

Why are property prices set to rise?

On our websites we have mentioned the proximate cause many times. The population of the United Kingdom is set to expand by 10 million people in the next 10 to 15 years in addition the population of London is set to expand by a staggering 1 million people in the next five years. Both previous governments and the current government do not plan to build an off homes. Therefore demand will outstrip supply the striving prices up and indeed making it even harder for people to get on the property ladder. This was reinforced by Mark Hayward, managing director of the National Association of Estate Agents saying that: "ongoing house price inflation, combined with low wage inflation, tighter lending restrictions and a shortage of affordable housing means owning a home will continue to be a distant dream for many." People will simply not have enough money after paying their rental costs to save for the ever-increasing deposits that they need to buy their own home.

That said, for existing homeowners it is good news. Watching the value of your property i.e. your wealth increase will give many security and peace of mind.

Watch out for taxes

Given the known growth area in property prices and recent attacks on stamp duty for buy to let landlords in addition to tax relief on expenses being restricted to basic rate tax, we expect even further activity from the government with future changes to taxes on residential property, not just for landlords but also for residential homeowners in the form of a "wealth tax" in the coming decade.